With Budget just around the corner, everyone is full of expectations and predictions and yet again there are so many speculations around the same. As we prepare ourselves for this year’s budget, we have our own wishlist which will help boost Life Insurance sector. There is a greater need for support in the life insurance industry, which through its long-term investments, allows households to meet their life stage goals and for the country to meet its capital requirement for infrastructure.
Our country saw major changes in the last year which distorted our economy by way of Demonetisation and GST. These were some bold reforms that changed the way of India’s economy. The life insurance industry of India is set to have higher growth in 2018 aided by low penetration and rising share of financial assets in household savings. Life Insurance in India is both a life risk mitigation tool and as well as an investment avenue. Also, with IRADAI mandating the linkage of Aadhar and PAN/Form 60 compulsory for all the insurance policies (both existing and new) will prove to be beneficial during claim settlements by generating the unique identity of the claimant. This will also help in identifying and removing fraudulent claims while creating the better customer experience.
With the new year 2018 and a new budget kicking in, several tax reforms are expected which should lead to certain relief measures for the taxpayers. Apart from this, a major eye is on the insurance sector and the changes that will be affecting the industry. We have listed some major expectations in the Life Insurance sector:
- A separate limit of Tax exemption for Life Insurance:
In a country where there is a very low social security provided by the government, it is important to drive people towards a more secure future, not only for them but also for their loved ones. It is imperative to invest in long-term financial instruments along with the short-term instruments like motor/ bike insurance. A separate limit of Rs. 50,000 per annum for life insurance will give a much required boost to the industry that serves approximately 36 crore customers today.
- Eradication of GST on protection instruments:
Many instruments like term plan, term rider, health insurance, critical illness plans or critical illness riders etc. should be exempted from GST. This will result in significant reduction in the premium amount and insurances policies which will be much more affordable to Indian households.
- Increasing the security cover of various government-led programs can act as a helping hand:
Government’s initiatives to promote life insurance through many government-led programs like Pradhan Mantri Jeevan Jyoti Bima Yojna, Pradhan Mantri Suraksha BimaYojna, Atal Pension Yojna (PMAPY) etc. government is doing it’s bit to promote life insurance in India and allowing many citizens to afford the same but an increase in the current protection cover of Rs. 2 lakhs offered under these schemes can help attract a large chunk of households.
- Tax benefit for all Pension Schemes:
The main purpose of retirement corpus is to create a fruitful retirement for the citizens of this country, then Life Insurance Pension Plans should be included in the separate limit of Rs. 50,000 currently offered under section 80CCD of NPS and 40% of maturity produce should be tax exempt on lump sum withdrawal.
- Increase in popularity of ULIPs:
Looking at the product profile, ULIPs and guarantees are expected to be more prominent in the Life Insurance industry. A stable market scenario and with a smooth cycle of domestic liquidity have helped ULIPs sale this year and the same is expected to grow.
With our society transforming to be more aware of their future and savings, Life Insurance is an important tool for risk prevention and savings for self and one’s partner as well. It is expected to see Life Insurance as an integral part of the insurance industry which will lead to big economic reforms.
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